A pre-approval is a lender’s early review of your finances. It tells you roughly how much you can borrow and at what rate, before you make an offer on a home. It’s one of the most useful steps you can take before you start shopping seriously.
What a pre-approval does for you
- Gives you a realistic price range, so you shop with confidence and don’t fall for a home you can’t finance.
- Holds an interest rate, usually for 90 to 120 days depending on the lender. If rates rise while you’re looking, your held rate is protected. If rates drop, many lenders will give you the lower rate.
- Shows sellers you’re a serious buyer, which matters in a competitive offer situation.
- Catches issues early, such as credit problems, missing paperwork or income that needs extra documentation, while there’s still time to fix them.
Rate holds generally apply to fixed rates. If you’re considering a variable rate, I’ll explain how that works with the lender you’re looking at.
How lenders decide how much you can borrow
Two rules shape your pre-approval amount:
The stress test. Every buyer has to qualify at a rate higher than the one they’ll actually pay: either 5.25% or your contract rate plus 2%, whichever is higher. For example, if your rate is 4.29%, the lender checks that you could afford payments at 6.29%. You still pay 4.29%. The test just makes sure you have room if rates rise.
Debt service ratios. Lenders compare your monthly costs to your gross income:
| Ratio | What it includes | Insured mortgage limit |
|---|---|---|
| Gross Debt Service (GDS) | Mortgage payment, property tax, heat and half of any strata or condo fees | 39% |
| Total Debt Service (TDS) | Everything in GDS plus car loans, credit cards, student loans and other debts | 44% |
This is why paying down a car loan or credit card before you apply can increase the amount you qualify for.
What a pre-approval is not
A pre-approval is not a guarantee. Your final approval depends on the property itself, your documents and the lender’s review at the time you buy. If your income, debts or credit change, your approval can change too.
Between pre-approval and closing, avoid:
- Taking on new debt, like a car loan or new credit card
- Changing jobs, especially to a probationary role
- Moving large amounts of money without a paper trail
- Missing any bill payments
If something does change, tell me right away so we can plan around it.
What I usually ask for
| Category | Typical documents |
|---|---|
| Identity | Government-issued photo ID |
| Income (employed) | Recent pay stubs, a job letter, and recent T4s or Notices of Assessment |
| Income (self-employed) | Two years of Notices of Assessment and full tax returns, plus business financials |
| Down payment | About 90 days of statements for the accounts it’s coming from, or a gift letter if family is helping |
| Debts | Details of loans, credit cards, lines of credit and support payments |
Please don’t send these by regular email. I’ll explain how to share them securely.
Timing
It usually makes sense to get pre-approved before you start touring homes seriously, ideally within the 90 to 120 days before you expect to buy so your rate hold covers your search. If you’re self-employed, give yourself extra time, since income documentation takes longer to review. See my guide for self-employed buyers.
Frequently asked questions
How long does a mortgage pre-approval last?
Most mortgage pre-approvals in Canada hold your rate for 90 to 120 days, depending on the lender. Many major lenders offer 120 days.
Does a pre-approval guarantee my mortgage?
No. A pre-approval is conditional. Final approval depends on the property, your documents and your finances at the time of purchase.
What’s the difference between pre-qualification and pre-approval?
A pre-qualification is a quick estimate based on information you provide. A pre-approval is a lender’s review of your actual documents and credit, and it usually includes a rate hold.
What is the mortgage stress test?
The mortgage stress test requires you to qualify at the higher of 5.25% or your contract rate plus 2%. It applies to both insured and uninsured mortgages and affects how much you can borrow, not the rate you pay.
How can I qualify for a bigger mortgage?
Paying down monthly debts like car loans and credit cards, increasing your down payment, or adding a co-borrower can all increase the amount you qualify for.
Next step
Every situation is a little different. If you’d like to talk through yours, book a consultation or read more about my home purchase mortgage service.
This guide is general information, not financial or legal advice. Rules, programs and rates change, so please confirm current details with me or the official sources linked above.